Directors Accused of Personal Benefit May Not Be ‘Independent’ to Decide on Suit

Directors Accused of Personal Benefit May Not Be ‘Independent’ to Decide on Suit

Directors Accused of Personal Benefit May Not Be ‘Independent’ to Decide on Suit

Court questions role of accused directors in deciding whether derivative action should proceed
Directors of a homeowners’ association accused of obtaining personal benefit from their allocation of limited road construction and maintenance funds may not be sufficiently “independent” to determine whether a derivative suit brought against them by other homeowners is in the best interests of the corporation, the Utah Supreme Court has ruled. It has reversed a trial court decision dismissing the case when the committee conducted an investigation and recommended that the suit be dismissed. ( Hi-Country Property Rights Group v. Emmer , Supreme Ct., UT, No. 20120202, 6/7/13. )

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